Forest City foreign buyers’ ban is likely to be ‘temporary’

Country Garden has to date only developed a fraction of the planned 20 sq km land reclamation (Source www.forestcitycountrygarden.com.my)

Units already sold won’t be affected as the govt will abide by international laws, says a consultant

By MARK RAO

The ban barring foreigners from purchasing properties in the US$100 billion (RM410.31 billion) Forest City development in Johor is believed to be a temporary measure to allow the developer to restructure the project.

The development, which involves the creation of four man-made islands off the coast of Johor, was initially targeted at Chinese buyers from China.

But sales of the multibillion high-end property enclave took a beating after Beijing slapped capital controls to curb the outflow of its currency.

Yesterday, Prime Minister (PM) Tun Dr Mahathir Mohamad announced that the development being built on reclaimed land off the Johor Baru coast will not be sold to international buyers.

Visas for prospective buyers for the project will also be disallowed.

Dr Mahathir said this is due to the project by China-based Country Garden Holdings Co catering to foreigners and not locals.

International property consultant Bruce Lee said the ban will be temporary to rectify the project to fall in line with the current government’s vision and benefit more stakeholders.

The Johor-based property consultant does not expect the units that have already been sold to be affected by the latest announcement as the government will abide by international laws.

“Units that have already been approved and sold will not be subject to the ban as the government will honour the rule of law,” he told The Malaysian Reserve.

Lee said the PM had reiterated that the country welcomes investment, but it must benefit the country.

“Dr Mahathir said he welcomes international investments as long as they benefit the country.

“So, an arrangement that benefits both the Forest City developer and Malaysia will be sought.”

He expects that buyers will recognise gains in the development as the government’s move would curb international take-up and limit supply, subsequently driving up prices.

Country Garden has to date only developed a fraction of the planned 20 sq km land reclamation via its Malaysian subsidiary Country Garden Pacificview Sdn Bhd. Chinese nationals had accounted for about 70% of the buyers of the project as of last year.

Country Garden Pacific-view said pursuant to Section 433B of the National Land Code, a foreign citizen or company can acquire land in Malaysia subject to prior approval by the state authority.

“We do not issue any permanent residency to foreign buyers of Forest City,” it said in a statement yesterday.

“We are currently in touch with the PM’s Office for clarification as we believe Dr Mahathir’s comments may have been taken out of context in certain media reports.”

The Forest City project has been widely criticised due to its impact on local housing developers, the high price which is beyond the buying means of locals and the influx of foreigners.

Following Pakatan Harapan’s historic victory after the general election in May, the project’s future seems clouded in doubts as the previous administration had barrelled through the project as part of its election campaign.

The move by Beijing to curb capital outflows from China, which included property purchases abroad, further brought down demand for the development from Chinese buyers who once accounted for as much as 80% of purchases. Today, that number has dropped to about 55%.

Forest City plans to house 700,000 people at capacity with 160,000 units across 14 sq km of land on four artificial islands. The gross development value of the project is estimated at RM444 billion.

Country Garden’s other projects in Malaysia include Country Garden Diamond City in Selangor and the Johor Baru-based Country Garden Central Park and Country Garden Danga Bay.